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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Warpfactor who wrote (7518)	9/7/2001 1:47:08 AM
From: energyplay	Respond to of 23153

Topic: Bay Area Real Estate in Free Fall ? Walking around my neighborhood (Mountain View) to get some exercise today, saw house a For Sale sign and flyers. Printed on the flyers was a price of $560,000. This was crossed out with a blue pen, and $539,000 written in. Looks like prices dropping quickly now - don't know how long this will last. Almost no one is buying at this point. I think many of the people selling now are not desparate for money, but do want to sell. They aren't out of money. Instead, it seems many had planned retire to the Sierras or Oregon or somewhere, and may already have bought their vacation / retirement house. Now, after a few really good years of stock options & bonuses, one or both of them get laid off or offered early retirement. So why stick around and let the value of the house drop ? I think we will see more of this, and prices continuing to drop. People are still leaving the Bay Area, so I think prices keep dropping until at least December/January. Another Bay Area note: Many people from Pacific Rim countries bought houses in the Bay Area as investments, and ways to get wealth into a secure place. Don't know if they are selling yet, but some of these place (which were usually rented ) had very good locations, etc. The investors 'overpaid' for prime property which could be sold easily and would tend to hold it's value - sort of like high quality collector coins. One thing to keep in mind is that we may be in a deflationary environment for a number of years. This is likely to mean salary cuts, unpaid vacation, etc. Unless your income is recession and deflation proof, figure on meeting the payments with about a 10% salary cut. Normally, the advice to buy as much house as you can afford is pretty good. I sometimes wish we had bought a little better house. I don't think these are normal times. Most of the time, I am very glad I did not max out on the house, so the mortgage payment doesn't kill me. Enjoy looking around...

To: Warpfactor who wrote (7518)	9/7/2001 10:55:27 AM
From: edward miller	Read Replies (1) \| Respond to of 23153

Allow me to add my 2 cents on this from the perspective of selling a house in Los Angeles 7 years ago. Also I would like to add that I have read that real estate does not fall until as much as two years after the peak in the economy, so beware. As to Los Angeles, the peak in the market was in 1988. I know this because a friend was lucky and sold right at the peak when he switched jobs and moved to Boise, Idaho just before real estate took off there. Also, several years later (1993) the LA Times showed a chart of housing prices, which peaked in 1988 and were still dropping at that time. We rebuilt our house from the foundation up and had a property that, based on comparable sales in 1988, would have been worth nearly $700K. We barely got $400K in 1994. After we left California I occasionally followed housing prices in the old neighborhood and they were still dropping for at least two more years. Now I realize that this is a location-specific example, and it represents an area that was heavily dependent on defense spending, which has been hammered since the fall of the Berlin Wall, but this is what can happen. If the Silicon Valley flounders for quite a while you will see real "fire sales" on housing at some point. Just MHO. Ed Miller

To: Warpfactor who wrote (7518)	9/7/2001 12:04:24 PM
From: kodiak_bull	Respond to of 23153

Warp, Unfortunately, there is no trustworthy knowledge on real estate unless you have an uncle in the business who's really sharp and has weathered a bunch of storms. Brokers are blind, developers are gamblers and homeowners (potential homeowners) are always hopeful. And what's true in one market is pretty much irrelevant to what's happening in yours. I have two suggestions for you. First, crunch some numbers and reduce your market to some very simplistic thoughts. What kind of house are you buying and would you be satisfied on an investment basis and lifestyle basis if it were only worth 100% of what you pay today 10 years hence? What about 80%? What about 50%? How does owning a house with mortgage payments, loss of investment capital, lack of liquidity (financial) and lack of liquidity (geographical--that means mobility, the freedom to leave at the end of the lease and get a better deal) stack up against what you and your wife have now? Run some hypothetical numbers as I have done in the past on who the cadre of buyers are for your house? Is it a big group (1600 sq. foot housing, reasonable monthly payments) or a smaller cohort (3500 sq. foot housing, $3500+ monthly nut)? Think about what happens to your equity when your house declines in value, think about negative equity. Second, go hang out on the real estate board Subject 51347 and see what their view is. My view on Bay area real estate is worthless, but it appears to me that you may save $100-250K in buying a house if you await what seems likely to be a pretty big real estate bust down there. Last time I was in SF I picked up a real estate guide and saw what I thought were pretty cramped row homes for $2 million pistoles. You could get a nice ranch in Idaho for that kind of money and have $$ left over to buy livestock. Kb

To: Warpfactor who wrote (7518)	9/7/2001 2:05:32 PM
From: Gottfried	Read Replies (1) \| Respond to of 23153

Warp, I say go for it. Mortgage rates won't drop much, if at all and Bay area housing in the modest price range [around $600k to $700k] won't either. I see no 'for sale' signs where I walk the dogs here in Sunnyvale. But several homes have improvement work going on - from new pool to added garage. Buyers who once looked at $1M homes may now be lowering their sights a little, adding strength to the price range I mentioned. Since it's a buyer's market and winter is approaching there's no great rush. Please let us know how it goes. Gottfried